State's business gateway has roadblocks

The Ohio Business Gateway has been updated, but the website has had a plethora of glitches since it went live July 2.

The updated Ohio Business Gateway, which Lt. Gov. Mary Taylor has beefed up to be a one-stop location for all business transactions with the state, has had more than its share of glitches since the new site went live July 2.

Business users and their accounting firms have struggled to create logins and get running on the system they use to file local income tax withholding and net profits tax withholding. Municipalities, which receive the proceeds of the income tax withholding, are complaining about slow payment.

In a letter to legislators released on Aug. 10, Kent Scarrett, executive director of the Ohio Municipal League, complained about the gateway's shortcomings.

"We are writing to alert you to the disgraceful failure of the Ohio Business Gateway to collect and remit municipal tax revenues despite repeated assurances they would be able to do so," the letter stated. "For weeks, both taxpayers and municipalities have been unable to properly use the Ohio Business Gateway. Municipalities are reporting taxpayers, including entire accounting offices, attempting to file and finding themselves locked out of the OBG completely, unable to even log into their accounts to make payments."

Ohio municipalities have been at odds with the state since legislation, which passed last year and went into effect in January, allowed businesses to elect to file their municipal tax collections with the state, through the Business Gateway. The state tax department then would distribute the taxes collected to the local governments.

The state developed and is promoting the Business Gateway as a one-stop, online location for all business transactions with the state, including license applications and other certifications.

The cities opposed letting businesses file through the gateway. When communities get payments filed with them directly, they get their money immediately. Payments made to the state are forwarded to municipalities through a city's Business Gateway account. State processing means a delay of a month in getting payment.

So it is an option for businesses, or their accountants, to make monthly or quarterly payments for municipal net profits taxes and state commercial activity taxes, as well as local income tax withholding for employees. State collection is attractive to businesses, which must file with multiple communities because they have employees working in a number of communities.

Then the state updated the gateway design in July. Shortly after the new system was up and running, Taylor told Crain's about the startup pains. She said the gateway's telephone help desk was getting 5,000 calls a day.

"That was extraordinary volume," Taylor said. "Of course, you're going to have glitches, but from everything I've heard, those glitches are being managed and dealt with as quickly as possible."

However, the complaints continued.

The volume prompted Joe Testa, director of the Ohio Department of Taxation, to issue a statement on July 26 that acknowledged that customers of the gateway had "experienced issues" when they logged onto the new system. The statement said that both the Department of Administrative Services, which administers the system, and the Department of Taxation, which processed tax payments made through the gateway, had added help desk staff to speed up problem solving.

As important, the statement said no late payment penalties would be assessed to any business that was unable to make a monthly tax payment by their deadline, provided a complaint had been made through a help desk.

"It was a frustrating process as (accountants) were trying to get into the system and get their login and password updated and make a payment," said Greg Saul, director of tax policy for the Ohio Society of Certified Public Accountants. "The tax deadlines were coming whether you could get into the system or not."

Part of the problem was the tighter security on the Business Gateway system. Accounting firm tax professionals, who used to be able to log on to their clients' accounts and make periodic tax payments through their own email addresses, now had to create a new email address — and login and password — for each client to get into the client's tax department account.

On the other side of the process, municipalities are complaining about not getting their withholding and net profits payments from the tax department. The cities count on those monthly or quarterly distributions from the state to pay their bills.

Amy Arrighi, chief legal counsel for the Regional Income Tax Agency, the Brecksville agency that collects and administers municipal income taxes for 320 Ohio cities, said the cities that RITA represents got only $6.5 million of an expected $7.8 million in employee withholding payments in July.

Veronica Showalter, fiscal manager of Troy in Central Ohio, said last Wednesday, Aug. 15, that until now, the city was getting its June net profits and withholding tax payments through the state a month after the state collected the taxes. So she expected that taxes collected in June would be released to the Troy Business Gateway account in July.

"This past month, we didn't get our June disbursement until August," she said. "This is money we used to collect ourselves and got in June. We actually received notification of how much we would get (for June) on July 27, but it wasn't deposited (in the city's Business Gateway account) until Aug. 3."

She added that she, too, is hearing from businesses about their struggles with the new gateway.

"Several businesses called to ask us to fix it because they couldn't log on," she said. "We can't fix it. It's the state's system. But their payment is still due by a certain date. I can't waive that deadline."